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FPA talks with White House about new advice fee models

Jun 24, 2014 @ 11:50 am

By Mark Schoeff Jr.

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Leaders of the Financial Planning Association believe that planners can come up with new compensation models to make the advice business more appealing to middle-income investors.

At a meeting with aides to the White House Business Council and the National Economic Council, FPA representatives on Monday outlined alternatives to the traditional compensation model of charging clients a small percentage of their assets every year – generally 1% – in return for financial advice. These alternatives include a flat monthly or hourly fee, for example.

“There is an impression that financial planning is only for the wealthy. That is so not true,” Janet Stanzak, FPA president and principal at Financial Empowerment, told reporters Monday afternoon. “We talked about some business models that exist and that continue to evolve that are effective in serving the middle market.”

Ms. Stanzak and other FPA leaders are in the capital for FPA's first Advocacy on Capitol Hill on Tuesday. The organization is sending 65 of its members to meet with Senate and House lawmakers and their staffs to try to advance FPA's legislative and regulatory agenda.

Before they get to the legislative branch, FPA leaders were concentrating on the executive branch. The White House has been focusing on policy toward the middle class and pushing that theme as a 2014 campaign issue. On Monday, it hosted a Summit on Working Families.

The topic of serving middle-income investors was prominent at a recent meeting of the FPA's NextGen group, comprised of FPA members who are 36 or under.

“They are extraordinarily passionate about figuring this out quickly,” said Edward W. Gjertsen II, FPA-president elect for 2015 and vice president of Mack Investment Securities Inc.

The FPA, which has 23,000 members, has put an emphasis on lobbying and campaign donations this year.

Members of the FPA will promote a fiduciary-duty rule under consideration at the Securities and Exchange Commission. They will also push a bill that would allow the SEC to charge advisers a user fee to fund an increase in examinations and will ask Congress to regulate financial planning as a profession.

An attempt to insert language in the 2010 Dodd-Frank financial reform bill to set up separate regulation of financial planners failed. It continues to be a challenge for FPA to make inroads on the issue on Capitol Hill.

“We're pushing a rather large boulder up a rather steep hill on the federal level,” said Michael Branham, FPA chairman and a financial planner at Cornerstone Wealth Advisors.

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